This section summarizes important tax changes that took effect in 1999. These changes are discussed in more detail throughout this publication.

Changes are also discussed in Publication 553, Highlights of 1999 Tax Changes.

Child tax credit.
You may be able to claim a tax credit for each of your qualifying children under the age of 17. For 1999, this credit can be as much as $500 for each qualifying child. See chapter 35.

Interest on student loans.
You may be able to claim a deduction for interest paid on a qualified student loan. The maximum deduction for interest paid on a qualified student loan is increased to $1,500. You claim the deduction on line 24 of Form 1040 or line 16 of Form 1040A. See your form instructions.

Tax from recapture of education credits.
You may owe this tax if you claimed an education credit on your 1998 return and, in 1999, you, your spouse if filing jointly, or your dependent received:

• A refund of qualified tuition and related expenses, or
• Tax-free educational assistance.

See chapter 36.

Individual retirement arrangements (IRA).
Generally, if you have a traditional IRA and are covered by an employer retirement plan, the amount of income you can have and not be affected by the deduction phaseout is increased. The amounts vary depending on filing status. See chapter 18 for details.

Capital gain distributions.
For 1999, if the only amount you would have to report on Schedule D (Form 1040) is a capital gain distribution, you may be able to report that amount directly on Form 1040, line 13. See chapter 17.

Foreign earned income exclusion.
The amount of foreign earned income that you can exclude increases to $74,000. See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

Standard mileage rate.
The standard mileage rate for the cost of operating your car is 32 1/2 cents a mile for all business miles driven before April 1, 1999. The rate is 31 cents a mile for all business miles driven after March 31, 1999. See chapter 28.

Self-employed health insurance.
The part of your self-employed health insurance premiums that you can deduct as an adjustment to income increased to 60%. See chapter 23.

Stop smoking program.
You can now include in medical expenses the amount you pay for a program to stop smoking and for prescribed drugs to treat nicotine withdrawal. See chapter 23.

Certain amounts increased.
Some tax items that are indexed for inflation increased for 1999.

Earned income credit.
The maximum amount of income you can earn and still get the earned income credit has increased. You may be able to take the credit if you earned less than $30,580 ($10,200 if you do not have any qualifying children). The maximum amount of investment income you can have and still be eligible for the credit has increased to $2,350. See chapter 37.

Exemption amount.
You are allowed a $2,750 deduction for each exemption to which you are entitled. However, your exemption amount could be phased out if you have high income. See chapter 3.

Limit on itemized deductions.
Some of your itemized deductions may be limited if your adjusted gross income is more than $126,600 ($63,300 if you are married filing separately). See chapter 22.

Social security and Medicare taxes.
The maximum wages subject to social security tax (6.2%) is increased to $72,600. All wages are subject to Medicare tax (1.45%).

Photographs of missing children.
The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE- LOST (1-800-843-5678) if you recognize a child.

Previous | Next

Publication 17 | 1999 Tax Year Archives | Tax Help Archives | Home